tv Studio 1.0 Bloomberg November 27, 2014 10:00am-10:31am EST
>> he is an uncommon breed in the world of enterprise technology. aaron levie is known for his color first sneakers -- colorful sneakers his magic tricks, and , ironic tweets. there is no underestimating his ambition to dominate the fight of business in the cloud. he started when he was 13 and met the kids who would become his cofounders as far back as middle school. but unlike places like facebook and twitter, where tales of early infighting are legend, all four of box's cofounders still work there a decade later. joining me now is aaron levie.
>> what are the socks? >> cloud socks. official cloud socks. >> you grew up in seattle. >> yes. >> what kind of kid were you? >> not too a typical of people in the tech industry. i spent far too long, far too much time, on the internet. most of those that were my friends founded the company with me. we were growing up in the shadow of microsoft. >> did you idolize jeff bezos and the bill gates? >> everybody knew the bill gates story by heart. what's cool about microsoft is that you can actually go and be a product tester. a lot of people from high school would actually go to microsoft and test new products and they would give you a free mouse. >> you met your cofounders in middle school. tell me about that.
>> the first cofounder of box, our chief financial officer, we actually played trumpet together in middle school. neither of us were good at that. throughout middle school and high school, i did a lot of stuff on the internet with jeff and later in high school. >> tell me how box began. >> not a lot of innovation happening. it was really hard to do basic things like, how do you share your files and access data from anywhere, and how do you collaborate and work with other people. i was in college at the time. what if you could have these sort of hard drives in the cloud that would let you put all your files in these hard drives and access it from the internet and the device you wanted to work from. >> tell me about those early days. fondest memories. >> one was mark cuban was an angel investor in box. and that was just done by a cold e-mail we sent to mark back in 2005.
he sent us a $350,000 check to people he had never met. that gave dylan and myself the idea that maybe we should pursue this full-time. it led to us putting the idea to our parents that we're going to drop out of college. they started to freak out. we had to do it and pursue this mission. we dropped out. and then we convinced our other two friends, sam and jeff, to also drop out of college. we all huddled together at berkeley. >> this is when you moved to the garage? >> we moved to this renovated garage in berkeley that my uncle had built up. i'm not sure it was legal at all. we would spend 16 hours a day, 17 hours a day, just working on the software, the business model, marketing. it was just four of us, just eating, sleeping in the same place. pretty disgusting, actually. if you really want to know, it is more akin to a sweatshop. this is how you build companies.
>> you tweeted a picture of that garage. saying box's first office where we slept, worked, and built. when it came to each of your cofounders, what were your roles? >> we got lucky. collectively. because we each bring a different kind of skill to the table. we had the software skills, the hardware, networking skills. we had the finance, administration, legal, business operations skills. that was dylan. and i focused on the product side. >> you say you fought. in those early days, what did you fight about? >> the sort of fighting and all of the bickering as founders. but the nice thing is that it all fell back on that trusted relationship that let us work through that. we did not have the same kind of early founding battles that other companies have run into. that was because we had been friends for, in some cases, a decade before we even started the company. >> facebook, twitter, tales of infighting and backstabbing. what makes box unique?
what makes you guys different? >> when you play trumpet with your cofounder at the right age of 11, you have a rooted friendship that bickering and frustration from building a company cannot break. >> has keeping the team together been a priority? >> yes. we spend a lot of time together. still. once a year, for instance, we do our own off-site. >> have any of you had a moment where you thought, i do not know if i want to keep doing this, i might want to move on? it has been 10 years. >> it has been 10 years. i have no idea if my cofounders have had those moments, but none that i have been told about. >> what is it like becoming a ceo at 19 years old, when your peers are in college, studying, partying? certainly not starting businesses. >> it is worse than what your peers are going through. it's not very illustrious to be a ceo of a two-person company. it got me excluded from parties. at the time.
people, from a distance, look like they were having a lot more fun. it is generally more fun to go out than be on a computer 14 hours a day during college. >> what is the myth of aaron levie and what is the reality? >> i think i am still early for myths. i do not know what myths have emerged. the reality is that it is a simple idea. our job is to build software that previous enterprises did not think was possible to create. >> how is aaron levie sitting in front of me today different from the 19-year-old? >> i think as the 19-year-old ceo, i would be grabbing my hair more. i had more issues with add. >> i know you are on the road a lot. how do you structure your time? >> it turns out that enterprises are everywhere. until you go out to a farm who is going to use drones to manage their agricultural business, you don't actually know how these technologies are going to intersect with the real world.
>> you drink a lot of coffee. >> i do. >> you take a nap. every day. >> i do. >> what is this, spain? >> you forgot the three vacations i take every year. >> you work more in the evening. tell me about that. >> it is the best practice -- right around 7 p.m. or so -- you take a 25 minute power nap and you wake up fully recharged and that lasts for about another five hours. that is me time. that is when i design what we are going to do next. what are we behind on? what do we need to start thinking about?
that is when everybody gets inundated by e-mails from me. >> you have a diary? like a personal, adam levy only diary. >> the range of different industries in what you have to learn about is very vast. you have to keep track of that somewhere. >> this is something only you see? >> yes, i would not want you to see it. so these are sort of my personal things. >> how big is box? >> we have 1100 employees. we have 240,000 businesses that actively use the product. about 39,000 companies are paying for our enterprise edition of the service. 27 million users. >> you recently rolled out box for industries. for health care and media and entertainment. how is that going and what is that? >> we started to see that in every industry we were serving there was some edge of our product or edge of their use cases that was far more advanced and innovative than we had ever imagined that could be done with our platform technology.
about a month ago, we announced box for industries that today covers health care, media, retail, but we will be announcing another couple of industries next month that will take box into regulated industries that we think are ripe for change. it will serve every major industry. >> you are seeing so much change and disruption in the world of enterprise technology. larry ellison stepping down. as the ceo of oracle. hp splitting up. ibm struggling. when it comes to incumbents versus startups, how does it play out? >> so every couple of decades, you have this sort of changing of the guard as it were. startups that are really optimized for that disruption have an opportunity to take advantage of that and potentially build the next era of ibm and hp and microsoft. at the same time, you do have incumbents that have a lot of cash. they are led by incredibly smart
and astute leaders that understand this change. the changes you are seeing are driven specifically because they know they are being disrupted. >> hp is not a technology company anymore. it is a bet against innovation. >> that is a provocative statement. but i think in terms of relevance, you have leaders of these companies that are recognizing that their previous strategy would have lead to irrelevance and they have to change that. we have this view that everything is zero sum. ibm does not have to lose for apple to win. or for salesforce to win. >> what about microsoft? a company that you grew up with. >> there are specific product areas where we could potentially lose or be harmed by some of this transition, but there is an entire company at the macro level that does not necessarily have to lose. >> so companies like microsoft, google, amazon are dropping the price of cloud storage. how much of a threat is that?
to box. >> we love that. the same unit of storage is now a 40th of a price and it was 10 years ago. on the supply side of our business. the cheaper storage gets, the more data we can store for a customer and the more we can deliver unique experiences around the content. >> you took on $150 million in funding from tpg. the company is now valued at $2.4 billion. why do you need that money? >> as you may have seen, we filed to go public in march of this year. basically, a week after we filed, there was a bit of a market correction in the tech stock space. so you saw a bit of volatility in a lot of high-growth technology companies. we decided it was not the best time to bring a new company to market. and we had amazing support from some private market growth late-stage investors. tbg and coutu in this case.
they were willing and interested in supporting the company is a private company. we took that money on to allow us to continue invest and grow, invest in the business model and build up box without going public. >> what is the status of the ipo? >> we are still on file. so there is a lot that i cannot share because we are still technically not able to talk too much about that. you will definitely be one of the first people to hear about it once we share any updated information. >> how much have you wondered, did we make a mistake? did we file too soon? >> what is obvious is that we should not have filed when we did. because we certainly dealt with a lot of distraction because of that filing. and so i think that whether that was -- a lot of the unfortunate news reports in the cycle that had to happen around the business -- obviously we brought on because of the filing. that was a distraction to what our core focus is, execution and building the business.
but, you know, life is too short to have any specific regrets. so we have learned. we have been and remain in full execution mode. >> i'm curious about what that moment was like for you. you open your books to the world. everybody can see your finances. they call it a house of horrors. >> that is an extreme phrase. we are competing against the biggest companies on the planet in the technology industry. and so to do that, you have to make a significant investment. in our case, that is an investment in research and development, infrastructure, sales team, and our ability to go to market and reach these customers. >> the criticism was that you are spending more on sales and marketing to acquire customers than you are making. how has that changed? >> every dollar of revenue is a dollar that is recurring annually. and so our job is to keep our customers happy and successful. and compound that dollar over time. we happen to reveal our s-1 at a point when new investments had outpaced the revenue scale.
and so now, i think, we are more in the stage where the revenue is focused on growing. that is compounding. we don't have many of the new significant investments because we have done a lot of the international expansion. we built out a lot of the enterprise sales force. and so you're starting to see that efficiency play out over time. >> how much have you thought about selling box? versus staying independent or going public. >> we sell our software to a lot of companies. as for the company itself, we spend about 0% of the time thinking about it. >> china, this is a critical market that a lot of technology businesses have trouble getting into. what is your strategy for getting into china now? >> my challenge has been how do we grow and explore working in the market. what you will see is a partner overtime with key players in the space. but i would not expect us doing
anything real big in china in the near future. >> there is a company called dropbox. >> yes, i have. >> you overlap to a certain extent in terms of business. how much of an inconvenience has dropbox been for you? over the last however many years? >> inconvenience is a unique word. i think they are an innovative company. drew is an incredible leader. we are a fierce competitor from the business standpoint. the business part of the market. but i think that the world is better with them. >> why do you think you can offer business customers something better than they can? >> i think that, when you go after the enterprise, it is really hard to balance a strategy where you are world-class on the consumer side and also be world-class for a hospital or a life sciences company or a financial services institution. those are just very different types of problems. at box, we don't have any
>> silicon valley is sometimes criticized for being too audacious, too arrogant, and thinking we can change the world. is that fair? >> it used to be that there was a cycle of disruption within silicon valley where software companies disrupted themselves. we are going through an evolution where we are having to interact with so many new markets in so many different ways. and at first that starts out as, we can solve those problems better than anybody else. sometimes that belief is right, and sometimes that is not. sometimes we look obnoxious for it. right? the outside world is unbelievably a fascinated with and excited about working with
silicon valley during this wave of disruption. something we do not get a perspective as often as we could or should. >> because we are living in our own bubble? >> we live in our own bubble. the view is that it is silicon valley versus the rest of the world. it is actually silicon valley being integrated into the rest of the world. for the first time, we are not in this isolated universe. it is its own industry. it is an unbelievably interesting time to be the same kind of retailer that five years ago you would have thought was going away because of the internet. there are a tremendous number of companies that have emerged that are trying to help you develop new experiences for your customers. 10 years ago you thought amazon was just going to destroy your entire industry, and now you are on the upswing because we want all new experiences of how we are going to go shop. >> so you think there is no such thing as the tech industry or in the future the tech industry
won't be so defined? >> i think it will be less defined, is the idea. you will have silicon valley. that should be seen as the sort of software layer of every other industry. >> your tweets are widely followed. semi funny. >> thank you. >> thank you for the good material. >> in response to concerns that you would reign in your tweets after deciding to go public, you tweeted a photo of a missouri law firm. and greeted your new followers. >> i'm not sure how that happened. >> hopfully you will get sued over it. >> i'm sure we sent them some traffic. >> tweeting as much as you do, why do you do it? >> one myth that i can dispel is that i generally tweet only once or twice a day. >> you are way behind mark andreessen. not 100 tweets a day. >> i am between peter thiel and mark andreessen regarding my
tweet volume. it is one outlet that my pr team does not control for me to be able to just share my thoughts on the technology industry. >> i guess i just wonder, why aren't you more scared? >> that might be generational. i grew up in chat rooms. i'm sure i will say some things that i wake up to in the morning and pull a donald trump or something, regret tweeting for a the rest of my life. >> how much of it is strategy? >> it is less strategic than you might think. because my brain is all over the place. it is actually very representative of the random notions that i have. >> i've had the benefit of seeing you do magic. >> i am less active now is a magician. >> that is a very hard thing to learn. what have you learned from that? how has it affected your career? >> magic is weird. have you been to magic conference? >> no. that sounds like an interesting experience. >> you think the tech industry has a diversity program?
-- problem? there is something called the international brotherhood of magicians. i do not think about anything except what not to do. it was a fun experience in my teenage years. >> will box become a public company? >> that is the path we are on. i would say it is pretty likely. >> would you say yes? >> i would say that it is the path we are on. >> would you ever start anything new? or is this it? >> if this continues to grow, i will be doing this for quite some time. >> do you want to be larry ellison? of cloud storage? >> it does not seem like he has had a horrible life. because of what we do, transcend different platforms and devices, ways you will work with information, there is no limit to what is going to be possible in our market, broadly. we have a very wide palette to work with. >> aaron levie, ceo of box. thank you very much. >> emily, thank you. >> great to have you.
>> welcome to a bloomberg special on "climate change and cities." over the next half hour, i talk to oecd secretary general angel gurria and michael bloomberg, u.n. special envoy for cities and climate change and founder of bloomberg lp. the titans go head-to-head on how best to tackle one of the biggest issues facing our generation. climate change is one of the topics we have been talking about recently. governments don't seem to be able to get a deal at all. why should we believe cities can make a difference when we cannot even reach a deal at the national level? >> governments do things that are in their interests.